Brazil sees opportunities if Trump pursues protectionism: minister

BRASILIA (Reuters) - Brazil has an opportunity to strengthen ties with Pacific and European nations that could be targeted if U.S. President Donald Trump pursues protectionist policies, the Brazilian trade minister said on Thursday.

In an interview with Reuters, Trade Minister Marcos Pereira pointed to Mexico, a longtime competitor for trade and investment in Latin America, as one of the countries that could develop stronger commercial relations with Brazil.

Tensions between Mexico and the United States have risen since Trump took office, with the U.S. president saying he intends to renegotiate the North American Free Trade Agreement and build a wall on the U.S.-Mexico border. Mexican President Enrique Pena Nieto on Thursday scrapped a planned summit with Trump.

Pereira also said he hoped Chile and Peru would gravitate toward Brazil and the South American trade bloc Mercosur now that Trump has pulled the United States out of the Trans-Pacific Partnership.

He added that Trump’s political ascent and arrival in the White House has prompted the European Union to show greater interest in concluding a trade agreement with Mercosur that has been under discussion for 15 years.

At the same time, Brasilia is hoping Trump does not restrict U.S.-Brazilian trade. The United States is Brazil’s second-largest trading partner after China and the largest market for its manufactured goods, including commercial planes.

“So far, Brazil has not appeared in Trump’s sights,” Pereira said. “I think Brazilian manufacturers will not be hurt and that our trade discussions with Washington will continue to advance.”

Brazil may not be on Trump’s radar because it buys more from the United States than it sells there - running a $646 million deficit last year - and is not drawing investment that threatens U.S. jobs.

Trade with Mexico, Latin America’s second largest economy after Brazil, has the potential to grow as the U.S.-Mexican relationship sours.

“We see this as an opportunity to expand trade and hope they have the same view,” Pereira said. “It would be good for Brazil and especially good for the Mexicans who are under pressure.”

The minister also came away from the World Economic Forum in Davos last week convinced the EU is keener than ever to reach a deal with Mercosur.

He said an agreement could be agreed politically by early next year, leaving thorny issues such as French and Irish resistance to lower agricultural barriers to be worked out later.

Brazil is in free trade talks with the European Free Trade Association that groups non-EU states Norway, Iceland, Switzerland and Liechtenstein, as well as with Canada.

The Trudeau government in Canada has also signaled it wants to negotiate a solution to a dispute over subsidies for plane-maker Bombardier that Brazil has threatened to complain about to the WTO, Pereira said.

“It is going to be a busy year with lots of talks between these players to deal with the protectionism that is coming ... given the stance of the new U.S. president,” he said.